The management of Office Supplies Inc. is considering dropping its least popular product, land line phones....

 

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The management of Office Supplies Inc. is considering dropping its least popular product, land line phones. Data from the company's accounting system related to the sales of land line phones appears below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $710,000 $357,000 $289,000 $159,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $231,000 of the fixed manufacturing expenses and $92,000 of the fixed selling and administrative expenses are avoidable if the sales of land line phones is discontinued. What would be the effect on the company's overall net operating income if land line phones are dropped? The management of Office Supplies Inc. is considering dropping its least popular product, land line phones. Data from the company's accounting system related to the sales of land line phones appears below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $710,000 $357,000 $289,000 $159,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $231,000 of the fixed manufacturing expenses and $92,000 of the fixed selling and administrative expenses are avoidable if the sales of land line phones is discontinued. What would be the effect on the company's overall net operating income if land line phones are dropped?

Answer rating: 100% (QA)

Overall net operating income would decrease by 30000 Explanation Net ... View the full answer